It appears that Hillary’s pneumonia has spread to global capital markets.

Last Thursday, with the S&P trading just shy of all time highs, we warned readers to “Brace For VaR Shock“, and explained how the BOJ’s surprising intent to steepen its Japanese yield curve could unleash a global bond market selloff, as a result of record high correlations between bond and stock assets. The very next day, accelerated by further hawkish comments by the Fed’s Rosengren who saw a “reasonable case” for a rate hike, the S&P saw its biggest plunge since Brexit as fears about central bank “inaction”, coupled with the realization of the BOJ-driven VaR shock spread through the market, and topped off with news that the Fed’s Lael Brainard was set to deliver an unscheduled last minute speech in Chicago today around noon, which according to some could hint at a September rate hike by the legacy dove.

While it remains to be seen what Brainard will say, the market today is in a sell first, ask questions later mode, as the Friday bond liquidations that started in Japan and spread to the US, has now slammed Europe. Here are some recent indicative levels courtesy of Tradeweb:

The biggest pain however is for Japanese bonds, where the 40 Year yield has exploded from 0.6% to 0.61% overnight, resulting in a 15% absolute price decline, from nearly 150 to under 130 in under 2 months,

Here is a snapshot of the current bond rout around the globe:

As we warned last week, and as @with the S&P trading just shy of all time highs, the correlation between bonds and stocks is now the highest it has been since the financial crisis…